Labour has been handed a campaign roadmap by Joyce's election year Budget; Alex Tarrant on the political fallout from the Greens and NZF supporting the 'families package'; And is there a gap there for National's coalition buddies?

By Alex Tarrant

How can Labour respond?

That’s the key question being thrown around political circles following Steven Joyce’s first Budget as Finance Minister.

Did Joyce’s move to cut tax bills and raise Working for Families (WFF) and Accommodation Supplement payments take the wind out of Labour’s sails?

Does Green Party and New Zealand First support in Parliament for Joyce’s ‘families package’ indicate a split on the left? What happened to that memorandum of understanding?

Steven Joyce’s first Budget as Finance Minister was largely predictable.

A fiscally conservative Budget letting New Zealanders “keep more of their own money,” as National’s Finance & Expenditure Committee chair Chris Bishop put it during the third reading for the WFF/tax change Bill on Friday.

Of course, National was attacked for not doing enough on health, education and housing. That’s par for the course.

The per capita and inflation adjusted figures showing how much funding will fall for core spending over next four years were staggering. It didn’t make a shot of difference last election though.

The tax bracket increases drew the most vehement response from Labour. Yes, lower income people got something – a family on $24,000 or less gained as little as $5 a week from the families package, but one on $127,000-plus will get $33, with five-sevenths of that stemming from the tax changes.

Joyce, English & co. were shackled from doing much different by their self-defined fiscal conservatism.

If they had only made changes to WFF and not introduced tax changes (something Labour says it would have backed), they could not have argued along the ideological lines that people should be able to spend more of their own money, and that the government should be redistributing less.

And that’s where the door might be slightly ajar for Labour as the general election campaign approaches.

Just as Labour’s response to National’s housing policy is ‘we’ll build more than you’, the clearest response to this Budget’s centre-piece is looking like, ‘we’ve got a bigger families package than you’.

In Parliamentary debate on Friday, deputy leader Jacinda Ardern offered up a hint of where the Party is set to head (or should head).

It won’t come as a surprise.

Labour said they supported Joyce’s changes to Working for Families. But because these were tied up in the same Bill as the tax bracket increases, Labour just couldn’t vote for them, apparently.

They introduced an ‘SOP’ or suggested amendment, that the WFF and tax changes should be separated out into different Bills to be voted on respectively.

The Greens supported that proposal, but with a shot of realism acknowledged the National-led government was not going to budge.

So, the Greens supported the whole families package Bill. Along with New Zealand First.

As Greens co-leader James Shaw put it, the Bill is not perfect, due to the tax changes, “but it does do something just a little for people who need it.”

You should take what you can get, even if it’s not perfect.

Labour was left on its own in Parliament opposing the Bill. That doesn’t happen often.

Were the Greens trying to show they could distance themselves from Labour if they wanted? Were they sidling up to New Zealand First with one eye on Peters’ likely veto over Labour-Green-NZF Cabinet appointments?

My understanding there was no collusion between the Greens and NZF. Shaw and Turei made the first move, on the floor of the House Thursday. New Zealand First then did the same, based on its own take on the Bill. Both are opposed to the rest of the Budget.

Despite the apparent split, speeches in Parliament Friday by Green and NZ First MPs did indicate how they could come to an agreement with Labour post-election on a larger families package.

Both were open to raising the abatement threshold for WFF from $36,000 to $55,000. Although in a first for this correspondent, a New Zealand First MP said the party would first like to see the proposal costed (!) before they gave full support.

So what could this package look like?

We already have the bare bones.

Labour welcomed Joyce’s Working for Families changes, particularly moves on payments for 16 and 17 year olds. Ardern congratulated National for taking on one of three recommendations from the Children’s Commissioner on the issue.

But that left two recommendations not taken on by the Government, she noted, using the opportunity to talk up Labour’s Best Start package.

It seems Best Start will be the backbone for Labour’s response to this part of the Budget.

When it lost the 2014 election, Labour put all policies under review. Only a handful have been re-announced to date (or new policies announced). Best Start isn’t one of them. Yet.

But you can bet that Labour is head-down figuring out how to boost the policy further. A Better Best Start policy. One that will target the lowest income earners and beneficiaries as well as families.

We know Labour isn’t going to move on the income tax side. Its opposition to National’s package includes that raising the tax brackets to the extent they were gives more to the rich than it does the poor, and is poorly targeted.

Those are some meaty surpluses in the Treasury forecasts for coming years. Grant Robertson should be able to argue some of that money should go towards helping the most in need, without changes inadvertently helping the least in need.

James Shaw was also not a fan of the tax changes – regressive rather than progressive, as he put it. While the Greens supported the Bill, there was only one way for proper moves that would target the least-well off in society, he said.

“Change the government.”

And if the Greens have enough power, there will be welfare, income and taxation changes “from day one.”

Of course, the gap that the Budget leaves open for Labour is also there for National to shift into later if its polling shows it needs a boost during the election campaign.

Perhaps more importantly, it leaves space for National to be ‘encouraged’ into that space post-election by a potential coalition partner – the Maori Party and United Future come to mind.

So does New Zealand First.

Watch Alex Tarrant discuss the Budget, and Labour's possible reaction to it, on Three's The Nation on Saturday 27 May here.